Question

You pay $5,500 per year for insurance on your building. Fire damage caused $15,000 in repairs. The insurance company paid for the repairs with a $1,000 deductible. Insurance premiums will go up by 15% because of the claim. What will be the annual insurance cost on the building next year

Answer 1

Based on the amount you pay now and the increase in insurance premiums, your annual insurance costs next year would be $6,325.

What is the next insurance cost next year?

The annual cost of insurance refers to the amount that is paid in premiums in a year.

That cost is currently $5,500 but will increase by 15%.

= Current insurance cost x ( 1 + rate of increase)

Solving gives:

= 5,500 x ( 1 + 15%)

= $6,325

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